Vietnam - Poverty Reduction Support Credit V

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This fifth Poverty Reduction Support Credit (PRSC 5) for the implementation of Vietnam's Comprehensive Poverty Reduction and Growth Strategy provides further support to Vietnam' s reform program. It supports: 1) Transition to a market economy. The present operation promotes greater internal and external competition and improves efficiency and resource allocation in the economy. Policy actions under the credit help improve the regulatory framework for private sector development, and enhance transparency and accountability in State-owned enterprise operations and in the banking sector. The credit supports the initiation of fundamental changes in the financial sector, designed to transform the State bank of Vietnam into a modern central bank, to strengthen the commercial orientation of State-owned commercial banks, and to develop capital markets. 2) Inclusive and sustainable development. The proposed credit also promotes human development through upgrading the quality of education (especially in poor zones), promoting inclusive education for children with disabilities, improving the access of the poor to health services, and helping secure asset ownership through the implementation of the new Land Law. The proposed credit also encourages important policy measures leading to more sustainable management of natural resources, including through strategic environmental assessments. 3) Building modern governance. The credit supports actions to implement the government' s public financial management reform agenda. More effective public resource allocation is achieved through better coordination plans and budgets and through the adoption of Medium- Term Expenditure Frameworks (MTEFs). New budget allocation norms increase the coherence between capital and recurrent expenditures. An anti-corruption law targets greater accountability in public finance and public administration. The credit also supports the ambitious agenda of the legal system development strategy.